Renminbi has potential to become global currency

The Renminbi entered the International Monetary Fund's Special Drawing Rights currency basket one year ago and the past year has seen a steady growth of the yuan's global influence as a new international currency for payment, financing and reserves.

China's economic growth is stabilizing, and the renminbi's exchange rate remains stable. Statistics show the amount of renminbi bonds held by overseas agencies reached 1.04 trillion yuan (US$157 billion) by the end of September, a record high.

According to the Society for Worldwide Interbank Financial Telecommunication, more than 1,900 financial agencies are using renminbi as their payment currency as of June, and more than 60 countries and regions have included the renminbi into their foreign exchange currencies.

IMF Managing Director Christine Lagarde said that the renminbi will be recognized by the international society and become an international currency which can be used freely around the world.

Observers say that more and more central banks and international investors recognize renminbi's importance, because China's market reforms to its economy and financial sector has increased the trust of the international community, and the importance and attraction of the renminbi as global reserve currency is decided by the market.

The Monetary Authority of Singapore says China has taken a series of big measures in opening its foreign exchange and securities markets to foreign agencies, and that’s why it has made the renminbi a foreign exchange reserve currency of Singapore.

According to SWIFT, the renminbi now accounts for 1.85 percent of global transactions, making it the sixth largest payment currency. Given the Chinese economy's global share, it is inevitable that the renminbi's share in international payments will markedly increase.

Lin Shiqiang, general-manager of the Industrial and Commercial Bank of China, said that China's economic and cultural cooperation with the Association of Southeast Asian Nations has far-reaching implications. The China-ASEAN investment circle will effectively increase the renminbi's use in ASEAN countries, and directly promote the internationalization of the renminbi.

Yet, becoming a SDR currency of the IMF poses higher requirements for the marketization of the yuan, experts say.

It is praiseworthy that the Chinese government has taken a host of measures to stabilize the value of the renminbi, which supports yuan's marketization, overcoming multiple challenges at home and abroad. And if China's financial reform and renminbi’s internationalization progress smoothly, it is likely that the yuan will become one of the three most important reserve currencies in the world along with the dollar and euro, analysts say.